Marketers often talk about the promise of location-based mobile advertising as the ability to target large groups of people with specific messages based on where they are. The problem with this scenario is that location-based tech companies focus on scale for both collecting data and buying programmatic ad inventory that’s often filled with fraud.
That’s the wrong way to think about it, argued Doug Rozen, chief digital and innovation officer at Omnicom-owned media agency OMD. Instead, Rozen said that marketers should use three factors to vet location data: Accuracy, precision and recency. In other words: Less is more in location-based advertising.
OMD thinks location-based companies make a lot of shady claims about their ad platforms, so it’s building its own programmatic private marketplace—dubbed Redpin—with the help of a handful of vetted players, including Snapchat and IBM’s The Weather Channel.
“What we’re seeing in location-based advertising is that the more scale that people talk about, the less confidence [there is] in the accuracy of the data,” Rozen said. “We thought it would be more appropriate to make accuracy the most critical factor in understanding location versus scale.”
Redpin works by serving ads on mobile sites and apps through Accuen, Omnicom’s programmatic platform. Location data from IBM’s The Weather Channel that is “verified, tested and understood,” is at the center of Redpin’s pitch. According to Rozen, The Weather Channel’s data “has the largest, first-party app install base—about 60 million people at my last understanding.” Rozen said that the location is accurate within two to three meters.
With the data, the agency then creates custom audiences and buys ads on “premium inventory sources” through Accuen. Snapchat-owned Placed is tracking the measurement piece of campaigns after ads run. GasBuddy and AccuWeather are in discussions as well as others to join the program in the coming months.
“With all of them, again, you can see good, first-party data,” Rozen said. “By us bringing all of these units together, we’re creating the scale.”
But to get here, and to find out how much location-based services like to exaggerate the truth in their capabilities, OMD ran an audit of 40 location-based companies nine months ago using a three-month request for proposal (RFP) process. The agency identified six areas where location firms aren’t as sophisticated as advertisers may believe.
“Everyone is saying that they do location but what we found is there’s actually a lot of myths around location,” Rozen said.
According to OMD’s findings, location players often claim to have first-party data collected directly from phones when they actually rely on third-party data collected from other companies that is less accurate and transparent. Location players also don’t detail where data is coming from and claim to have access to “real-time” data from hundreds of thousands of apps but decline to explain where they get ad inventory from. Fraud and inaccurate location are also problems that OMD’s research identified.
Part of the problem is that location-based advertising has loose definitions associated with it. Tech companies’ understanding of first-party data is different from OMD’s criteria. For example, while third-party companies claim to have first-party data collected directly from phones, they actually collect third-party data that comes from an external source, meaning that it could be inaccurate and full of fraud.
“There are very few people that actually have a first-party data set and have it at a good enough scale,” Rozen said. “People are allowing looser definitions than we feel are appropriate.”
Rozen declined to name the specific companies that were included in the audit but said that OMD asked each company to lift the hood on its technology and see direct location IDs that weren’t accurate.
“We’d be standing in our office either in New York or Los Angeles and it would show us miles away from where we were,” he said.
Redpin was built to help advertisers target specific groups of consumers using first-party data (or its own data sets) that run on premium inventory. Rozen declined to name specific brands, but said that an entertainment company and retailer has piloted Redpin last quarter with four more brands testing it this quarter. The pilots boosted store visits by 21 percent compared to a campaign run by a “major third party.”
As agencies continue to search for ways to provide value to their clients, it will be interesting to watch if others create their own ad networks. Because apparently what’s old is new again.
Update: This article has been updated to remove Foursquare from the list of upcoming companies participating in Redpin. According to Omnicom, the two companies are not in talks as part of the program.